Justia Contracts Opinion Summaries

An insurance company appealed a decision on the issue of coverage under a claims-made-and-reported policy. The appellate court found that, under the Direct Action Statute, an insurer could not use the policy’s claim-reporting requirement to deprive an injured third party of a right that vests at the time of injury. After considering the applicable law, the Supreme Court found that the reporting provision in a claims-made-and-reported policy was a permissible limitation on the insurer’s liability as to third parties and did not violate the Direct Action Statute. Accordingly, the Court reversed that portion of the court of appeal’s decision relating to the claim of the injured third party, and reinstated the trial court’s judgment, finding no coverage. View "Gorman v. City of Opelousas" on Justia Law

Charles Blackmon and Dexter Booth sued Malaco, Inc.; N.J. Pockets, Inc.; and Callop Hampton (owner of Hamp’s Place Night Club) on a premises-liability claim. Plaintiffs settled with Malaco. At trial, the jury returned a verdict in favor of Hampton. Hampton filed a post-trial motion, requesting the trial court to impose sanctions against Blackmon, Booth, and their attorney for filing a frivolous lawsuit and to award attorney fees. The motion was denied, and Hampton appealed that judgment to the Supreme Court. Finding no abuse of discretion, the Supreme Court affirmed. View "Hampton v. Blackmon" on Justia Law

This appeal involved Empire Fire and Marine Insurance Company's obligations under an "Insurance for Non-Trucking Use" policy issued to Drielick Trucking. The policy contained a business-use exclusion, which included two clauses that Empire argued precluded coverage in this case. The Court of Appeals agreed that the first clause precluded coverage when the covered vehicle was not carrying property at the time of the accident, was in this case. Thus, the Court of Appeals expressly declined to address the second clause relating to leased covered vehicles. The Supreme Court held that the Court of Appeals erred in its interpretation of the first clause. The case to the trial court for further fact-finding to determine whether Drielick Trucking and Great Lakes Carriers Corporation (GLC) entered into a leasing agreement for the use of Drielick Trucking’s semi-tractors as was contemplated under the policy's clause related to a leased covered vehicle. View "Estate of Eugene Hunt v. Drielick" on Justia Law

The Club is a non-profit provider of protection and indemnity insurance. The Club's Rules include a choice-of-law provision selecting New York law and a two-year statute of limitations for claims against the Club. The Club filed a civil action against defendant alleging that it breached the insurance contract by failing to reimburse the Club for a shortfall and by failing to pay the overdue insurance premiums. The court agreed with the district court, and precedent, that an otherwise valid choice-of-law provision in a maritime contract is enforceable and may require application of a jurisdiction's statute of limitations, in lieu of the doctrine of laches, to govern issues regarding the timeliness of claims asserted under that agreement. Accordingly, the court held that the district court correctly applied New York's six-year statute of limitations to the Club's claims arising under its maritime insurance contract with plaintiff. Therefore, the court affirmed the judgment of the district court. View "American Steamship Owners v. Dann Ocean Towing, Inc." on Justia Law

Mark Hansen was a former vice president of Wilcox Industries Corp. After Hansen left Wilcox, he founded his own company, Advanced Life Support Technologies. Wilcox filed a complaint against Hansen, alleging that Hansen stole Wilcox’s customers and spread false and damaging information about Wilcox’s products. Hansen tendered his defense to Wilcox’s insurer, Sentry Insurance Company. Sentry denied coverage, stating that it did not have a duty to defend or indemnify Hansen against Wilcox’s claims. Hansen subsequently filed suit seeking a declaration that Sentry owed a duty to defend and indemnify him with respect to Wilson’s complaint. The district court granted summary judgment for Wilcox, concluding that Hansen did not qualify as an “insured” under Wilcox’s policy. The First Circuit affirmed, holding (1) Sentry owed no duty to defend or indemnify Hansen in the underlying litigation; and (2) there was no evidence in the record that would permit a reasonable jury to find that Sentry breached any contract with Hansen. View "Hansen v. Sentry Ins. Co." on Justia Law

In January 2007, the Bank of Idaho made two construction loans to developers who planned to construct a fourplex on each of two adjoining lots in Idaho Falls. The bank loaned one sum of money to build a fourplex on Lot 1 and another sum for a fourplex on Lot 2. The bank secured a separate policy of title insurance for each lot that was issued by the predecessor of First American Title Insurance Company. Each policy included an endorsement that the parties understood would insure against loss or damage that the bank might sustain by reason of a multifamily residence not being constructed on the lot. After discussion with representatives of the city, the developers changed their original plans and built both fourplexes on Lot 2 and built a parking lot with storm water retention and landscaping on Lot 1. The developers later defaulted on their loans, and the bank foreclosed on both deeds of trust. At the foreclosure sale, the bank acquired each lot by making a full credit bid on all amounts due and owing on the note secured by the deed of trust. In 2010, the bank submitted a claim under the title policy issue with respect to Lot 1 to recover under the endorsement. The insurance company rejected the claim and the bank filed suit to recover under the policy. The district court granted the insurance company’s motion for summary judgment and dismissed this action. The bank then appealed. The Supreme Court concluded after its review that the district court erred in holding that the title insurance company had no liability under the policy. The endorsement provided that "[t]he Company hereby insures the owner of the indebtedness secured by the insured mortgage against loss or damage which the insured shall sustain by reason of the failure of [a multifamily residence to be built on Lot 1]." The endorsement insured against "loss or damage" that the bank argued was the failure of the multifamily residence to be constructed on the lot. It did not define what constituted "loss or damage." Subsections of the pertinent indemnity clause stated limits on the insurance company's liability, but it did not define loss or damage. Accordingly, the district court was reversed and the case remanded for further proceedings. View "Bank of Idaho v. First American Title" on Justia Law

On November 14, 2009, sewage entered into and damaged the home of plaintiffs Justin and Brandy Porter. At the time, Plaintiffs' home was insured by defendant Oklahoma Farm Bureau Mutual Insurance Company under a "Homeowners Special Coverage Policy." Plaintiffs filed a claim for their loss, which defendant denied. Subsequently, plaintiffs filed a petition in the district court for breach of contract and breach of the duty of good faith and fair dealing. Plaintiffs argued that the district court should follow "Andres v. Oklahoma Farm Bureau Mutual Insurance Co.," (227 P.3d 1102, cert. denied, (Nov. 23, 2009)) to find that the policy was ambiguous because it contained conflicting provisions on loss caused by water damage and that the doctrine of reasonable expectations required the ambiguity to be construed in favor of coverage. Plaintiffs also argued that defendant committed bad faith when defendant wrote a policy that both includes and excludes a named peril and then denied plaintiffs coverage under the policy. Plaintiffs amended their petition to bring classwide claims on behalf of others similarly situated. Plaintiffs amended their petition a second time to allege "breach of the implied covenant of good faith and fair dealing and/or fraud," individually and classwide. Plaintiffs' motion for leave to file a second amended petition did not address an individual or class-action fraud claim. Defendant moved to dismiss the class-action claims and the fraud claim for failure to state a claim upon which relief can be granted. Defendant subsequently stated that the motion to dismiss "[did] not address any other claims" and that "a dispositive motion challenging the merits of Plaintiffs' individual breach of contract and bad faith claims [would] likely be filed in the future." The district court, however, dismissed all claims. The issue before the Supreme Court on appeal was whether the district court erred in granting defendant's motion to dismiss. The resolution of this issue turned on two questions: (1) whether plaintiffs' homeowners policy was ambiguous when the policy covers loss to personal property "caused by . . . accidental discharge or overflow of water from within a plumbing . . . system" (the accidental-discharge-coverage provision) and excluded coverage for loss to real and personal property "resulting directly or indirectly from . . . water which backs up through sewers or drains" (the sewer-or-drain-backup exclusion); (2) if the policy was ambiguous, whether the doctrine of reasonable expectations required the ambiguity to be construed in favor of coverage. The Supreme Court found the district court erred in dismissing the petition in its entirety when the allegations taken as true stated a claim for breach of contract. View "Porter v. Oklahoma Farm Bureau Mutual Ins. Co." on Justia Law

Plaintiff Thomas P. Whelan, Jr.'s decedent father, Thomas P. Whelan, Sr., was in Plaintiff's parked truck when it was hit by a moving vehicle. The collision allegedly resulted in severe injuries and medical costs in excess of $100,000 and ultimately in the decedent's death a few years later. At the time of the accident, occupants of Plaintiff's truck were insureds under the terms of a $50,000 liability policy issued by State Farm, facially providing no UM/UIM coverage. In the Supreme Court's decision in "Jordan v. Allstate Ins. Co.," the effective rejection of an insured's statutory rights to UM/UIM coverage equal to liability limits had to be made in writing and as part of the insurance policy delivered to the insured. Because the result in "Jordan" was foreshadowed by other precedents, the Supreme Court declined to make Jordan applicable only to cases arising in the future, and held that policies that failed to comply with Jordan's rejection requirements would be judicially reformed to provide full statutory coverage. In 2011, following the 2010 issuance of Jordan, Plaintiff made a demand on his insurer State Farm for reformation of his policy that was in effect at the time of the accident. Relying on a clause in the policy that purported to bar UM/UIM claims made more than six years after the date of the underlying accident, State Farm rejected the claim. Plaintiff then instituted a declaratory judgment action against State Farm for reformation of the policy. Upon review of this matter, the Supreme Court held that a limitations clause based solely on the date of the accident without consideration of the actual accrual of the right to make a UM/UIM claim was unreasonable and unenforceable as a matter of law. But addressing the merits of Plaintiff's action, the Court also held that judicial reformation under Jordan did not extend to historical insurance contracts formed before another precedential opinion was issued in 2004. Because the policy in this case was issued before that date, it was not subject to retroactive reformation of its facial lack of UM/UIM coverage. View "Whelan v. State Farm Mutual Auto Ins. Co." on Justia Law

Plaintiff, a Milwaukee County sheriff’s deputy, was injured while on duty by a motorist to whom she had just given directions and was allegedly helping to get back into the lane of moving traffic. Plaintiff sought coverage under her employer’s underinsured motorist policy, which pays sums owed by an underinsured tortfeasor to an insured person who is injured while “using an automobile” within the scope of her employment or authority. Plaintiff claimed that she was “using” the automobile that hit her because she was essentially controlling the vehicle. The circuit court granted summary judgment to the insurer. The court of appeals reversed. The Supreme Court reversed the court of appeals, holding that Defendant was not using the vehicle at the time of her injury. View "Jackson v. Wis. County Mut. Ins. Corp." on Justia Law

At issue in this case was which party was entitled to insurance funds under an insurance policy on a parcel of property that sustained water damage. Stanley Gurnick and Phoenix-Gurnick, RIGP claimed they owned the property as a result of a foreclosure sale. Navigant Credit Union claimed it was entitled to the funds as the named mortgagee/loss payee in the insurance policy. The superior court decided that Navigant was entitled to the insurance proceeds because the funds were personal property under the insurance contract and Navigant was named a loss payee under that contract. The Supreme Court affirmed, holding that the hearing justice correctly determined that Navigant was entitled to the insurance proceeds. View "R.I. Joint Reinsurance Ass'n v. O'Sullivan" on Justia Law